McCoy has the following account balances as of December 31, 2020,  before an acquisition transaction takes place.

Inventory	$125,000
Land	450,000
Buildings	575,000
Liabilities	(590,000)
Common stock ($10 par)	(75,000)
APIC	(200,000)
Retained earnings (12/31/20)	(285,000)

 

The fair value of McCoy’s Land and Buildings are $650,000 and $600,000, respectively. On December 31, 2020, Ferguson Company issues 30,000 shares of its $10 par value ($30 fair value) common stock in exchange for all of the shares of McCoy’s common stock. Ferguson paid $12,000 for costs to issue the new shares of stock. Before the acquisition, Ferguson has $800,000 in its common stock account and $350,000 in its additional paid-in capital account.

At the date of acquisition, by how much does Ferguson’s additional paid-in capital increase or decrease?

rev: 10_05_2019_QC_CS-182995, 10_11_2021_QC_CS-281560

Multiple Choice

1. a. $0
2. b. $588,000 increase.
3. c. $600,000 increase.
4. d. $612,000 increase.
5. e. $900,000 decrease.
6.  
7. 
   

Answer rating: 100% (QA)

Correct answer b 588000 increase Particulars Amount Number of sh... View the full answer